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If MOC is constant, the shape of PPC will be
- a)Inverted
- b)Convex
- c)Straight
- d)Concave
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
If MOC is constant, the shape of PPC will bea) Invertedb) Convexc) Str...
The slope of the curve at any point represents the ratio of the marginal opportunity costs of the two commodities. That is, the marginal opportunity cost of an extra unit of one commodity is the necessary reduction in the output of the other.
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If MOC is constant, the shape of PPC will bea) Invertedb) Convexc) Str...
Explanation:
Constant MOC and Shape of PPC:
When the Marginal Opportunity Cost (MOC) is constant, the shape of the Production Possibility Curve (PPC) will be straight.
Reasoning:
- The Production Possibility Curve (PPC) shows the maximum possible combinations of two goods or services that can be produced with the given resources and level of technology.
- The slope of the PPC represents the MOC, which is the amount of one good that must be given up to produce an additional unit of the other good.
- When the MOC is constant, it means that the opportunity cost of producing one more unit of a good remains the same, regardless of the quantity being produced.
- In this case, the PPC will be a straight line because the trade-off between the two goods remains constant throughout the production possibilities.
Implications:
- A straight PPC indicates that resources are perfectly substitutable between the two goods or services being produced.
- It also suggests that the economy is operating efficiently and utilizing resources in the most optimal way.
Therefore, if MOC is constant, the shape of the PPC will be straight, reflecting a consistent trade-off between the two goods or services being produced.
Constant MOC and Shape of PPC:
When the Marginal Opportunity Cost (MOC) is constant, the shape of the Production Possibility Curve (PPC) will be straight.
Reasoning:
- The Production Possibility Curve (PPC) shows the maximum possible combinations of two goods or services that can be produced with the given resources and level of technology.
- The slope of the PPC represents the MOC, which is the amount of one good that must be given up to produce an additional unit of the other good.
- When the MOC is constant, it means that the opportunity cost of producing one more unit of a good remains the same, regardless of the quantity being produced.
- In this case, the PPC will be a straight line because the trade-off between the two goods remains constant throughout the production possibilities.
Implications:
- A straight PPC indicates that resources are perfectly substitutable between the two goods or services being produced.
- It also suggests that the economy is operating efficiently and utilizing resources in the most optimal way.
Therefore, if MOC is constant, the shape of the PPC will be straight, reflecting a consistent trade-off between the two goods or services being produced.
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If MOC is constant, the shape of PPC will bea) Invertedb) Convexc) Straightd) ConcaveCorrect answer is option 'C'. Can you explain this answer?
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